Buying first property for sale by owner. Need help

Flipper/Rehabber · Southern, WI · Member since 2016 · 53 posts · 6 votes

So were selling our first live-in flip in 2 weeks, I've found another property to buy that is for sale by owner. I made the seller an offer and he has accepted, whats next? I'd like to get a purchase/sale agreement to him asap to lock the deal down because I don't want to give them enough time to tell anyone they are selling it and receive a higher offer on it. How can I go about doing this? Should I just contact an agent and ask them to write an offer for me? or would it be better to find a real estate attorney or just call a title company? about How much would I expect to pay for this?

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Landon Hayes

Richmond, VA · Member since 2017 · 2 posts · 1 vote

Hey Chris, sounds like exciting times for you right now 👍, so congratulations. There's a couple different ways you can approach this.....but I can tell you what I would do in your situation. I would draw up my own purchase agreement and get the seller and yourself to sign it at the same time in person if possible. If you ask an agent to do this for you they are going to want compensation of some sort as a buyers agent. If you would like some guidance on exactly what needs to be in the purchase agreement I can provide that as well. As soon as that is executed though, you will have the exclusive right to purchase the property as long as you follow through on the terms of the contract. You just need to make sure that the purchase agreement that you use has all the necessary information, clauses, disclosures, contingencies, etc required by your state. It sounds like you would at least want to include a home sale contingency fee which means that the agreement would only be valid in the event that you were able to sell your current home that you're about to put on the market. You also always want to include a home inspection contingency so that you minimize risk associated with unknowns that could come up and back out of the deal if anything huge comes back in the report. It would probably be best for you to arrange for the title company upfront and pay a couple hours to a real estate attorney to make sure you've covered all your bases - probably cost you around $500 or so. As long as your purchase agreement is solid though you should be good to go without having to pay an agent to simply submit an offer you've already verbally gotten acceptance on. This will at least accomplish your main goal of locking the house down and avoiding someone else from swooping in and taking your deal. Best of luck! I hope everything goes smoothly with the sale of your first fix n flip! If you have any other questions don't hesitate to ask - this community has got you covered 😎

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Landon Hayes
Richmond, VA · Member since 2017 · 2 posts · 1 vote
9y
Hey Chris, sounds like exciting times for you right now 👍, so congratulations. There's a couple different ways you can approach this.....but I can tell you what I would do in your situation. I would draw up my own purchase agreement and get the seller and yourself to sign it at the same time in person if possible. If you ask an agent to do this for you they are going to want compensation of some sort as a buyers agent. If you would like some guidance on exactly what needs to be in the purchase agreement I can provide that as well. As soon as that is executed though, you will have the exclusive right to purchase the property as long as you follow through on the terms of the contract. You just need to make sure that the purchase agreement that you use has all the necessary information, clauses, disclosures, contingencies, etc required by your state. It sounds like you would at least want to include a home sale contingency fee which means that the agreement would only be valid in the event that you were able to sell your current home that you're about to put on the market. You also always want to include a home inspection contingency so that you minimize risk associated with unknowns that could come up and back out of the deal if anything huge comes back in the report. It would probably be best for you to arrange for the title company upfront and pay a couple hours to a real estate attorney to make sure you've covered all your bases - probably cost you around $500 or so. As long as your purchase agreement is solid though you should be good to go without having to pay an agent to simply submit an offer you've already verbally gotten acceptance on. This will at least accomplish your main goal of locking the house down and avoiding someone else from swooping in and taking your deal. Best of luck! I hope everything goes smoothly with the sale of your first fix n flip! If you have any other questions don't hesitate to ask - this community has got you covered 😎
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Chris E.
OP
Flipper/Rehabber · Southern, WI · Member since 2016 · 53 posts · 6 votes
9y
Thanks for the info. I should have been more specific though. Our house were selling has an accepted offer and is set to close in 10 days. The house were wanting to buy is a major fixer upper deal and is going to be completely as-is, And is extremely cheap (less than the assessment value on just the land) we may even just buy it with cash and finance it later to get the cash out. So we wont have any inspections or anything extra done before buying.
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Chris E.
OP
Flipper/Rehabber · Southern, WI · Member since 2016 · 53 posts · 6 votes
9y
Couple more details; the owner is out of state, I live in WI which is where the property is and he lives in Indiana so I am thinking i should get an offer/agreement in the mail today to have him sign and maybe a $100 check as earnest money. For this agreement will we each need to sign in front of a notary? Or is just signing with out good enough? The only thing i want specifically added to the contract is that the offer is made on the house and all contents. Its mid rehab and there are new cabinets, fixtures etc sitting in boxes that i dont want them packing up and taking right before we close the deal
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Scott Steffek
Flipper/Rehabber · Crown Point, IN · Member since 2009 · 482 posts · 216 votes
9y
Chris,
I would go to docusign.com. You can upload a contract on this site and then you go into the contract and "mark" where the seller needs to sign and initial. You then enter his email address and within seconds he has the document and he can sign for it. This is far better than mail! You can always escrow the earnest money with your title company and let the seller know that. I believe they offer a free 30 day trial. I use this service all the time. The close can actually be transacted through email too. Talk to your title company about that. Best of luck.
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Michael Henry
Real Estate Consultant · Brookfield, WI · Member since 2014 · 873 posts · 350 votes
9y
@Chris E. I use rocketlawyer.com for a lot of my business document needs. Let me know if you need help with the purchase of this property.
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Chris E.
OP
Flipper/Rehabber · Southern, WI · Member since 2016 · 53 posts · 6 votes
9y
Thanks for the tip on docusign, I used that and now have the property under contract. Amazing how the internet speeds things up. To think this morning I was about to get a contract written up and mailed and would have been waiting days for it to come back. I havent done this before, But I believe the next step is getting in touch with the title company which is what I plan on doing tomorrow. I always think of legalzoom, I need to remember to check out rocket lawyer next time I need to find a legal document of some sort
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Landon Hayes
Richmond, VA · Member since 2017 · 2 posts · 1 vote
9y
Chris that's awesome! Congrats again....like j said, exciting times for you. So those online services are great for some specific situations. But if I were you, and you want to keep doing this - which it sounds like you do. I would start developing a relationship with an attorney that practices as a settlement agent too. Proposition him that you will bring him all your closings and provide referrals and start establishing a mutually beneficial situation. This is honestly what helped my business absolutely take off - I partnered with a general counsel that worked in a reputable firm that handled everything from closings, bankruptcy, probate, divorce ....I mean you name it. And it has been a priceless investment of time and energy that has resulted in big things for both of us. Which is obviously ideal 👍 That would be an invaluable next step in your progression in so many ways.....again congrats tho!
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Chris E.
OP
Flipper/Rehabber · Southern, WI · Member since 2016 · 53 posts · 6 votes
9y
Thanks, definitely exciting, little scary but that comes with it. I'm definitely going to need to get on that. Because I already have several different things I need help with and have questions about.
More info on the deal Im working on. Its a house I saw last summer with a for sale sign in the window. Wrote the number down but after looking at it closer I thought it needed too much work. I remembered it a week or so ago when I was trying to find a place for us to buy now that our house is selling. So I looked the house up, and decided to check if there were back taxes or anything owed. I pulled it up on the county mapping and find out that its actually 4 lots and 2 houses all on one parcel and 1 tax bill. So I got ahold of the owner and found out it was for sale still even though the sign was no longer up. He inherited it several years ago when his mom passed away and no longer wanted it. He lives in Indiana and the houses are here in Wisconsin. One house basically needs to be gutted, his brother is currently living in it though. Its just layered with one cheap repair on top of another. And the other was gutted last year and rewired and drywalled and thats where it sits today. Both are small houses, 1bd and 2bd. Owner has already bought cabinets, shower, toilet, sinks, vanity faucets, light fixtures etc all brand new in boxes just waiting to be installed. Newer furnaces in both houses also. Hes lost interest in driving up here and working on them though and wants them gone. Asking $50,000 for the whole deal. I have it under contract now for almost Half that.
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